It sounds like the GOP is going to bring back up the idea of
attaching a Balanced Budget Amendment to the constitution.

In a series of
tweets this morning, the National Review's star DC reporter
Robert Costa basically explained that the idea is to toss a bone
to the far right (by proposing a BBA) and perhaps bring Obama to
the center on spending. Nobody actually thinks there's any chance
of said amendment getting through Congress anytime soon.

This new move towards a BBA was anticipated a bit by George Will,
who pushed for one in a column earlier this week, basically
arguing that politicians are irresponsible, and only a
constitutional amendment could force them to behave.

He starts by knocking over what he see as the "various" counter
arguments.

The arguments against a constitutional amendment to require
balanced budgets are various and, cumulatively, almost
conclusive. Almost. The main arguments are:

The Constitution should be amended rarely and reluctantly.
Constitutionalizing fiscal policy is a dubious undertaking.
Unless carefully crafted, such an amendment might instead be a
constant driver of tax increases. A carefully crafted amendment
that minimizes this risk could not pass until Republicans have
two-thirds majorities in both houses of Congress, which they have not had since 1871.

Furthermore, requiring a balanced budget would incite creative
bookkeeping that would make a mockery of the amendment and the
Constitution. For example, New York, which like 48 other states
(all but Vermont) has some sort of
requirement for a balanced budget, once balanced its by selling Attica Prison to itself: A state
agency established to fund urban redevelopment borrowed $200
million in the bond market, gave the money to the state and took
title to the prison. The state recorded as income the
$200 million, declared the budget balanced, then rented the
prison from the agency for a sum adequate to service the $200
million debt.

All of those points are fine, as it goes, but they're far from
the complete range of arguments against the idea.

The biggest problem with a Balanced Budget Amendment is that it
would destroy the economy. Yes, destroy.

The size of the deficit is mostly a function, at any given time,
not of spending or taxation policies, but of economic growth.

This can easily be demonstrated by looking at a chart comparing
deficits as a % of GDP vs. unemployment.

For over 60 years, throughout various policy regimes, the deficit
has moved in tandem with employment. Taxation and government
policy have never had much to do with how big the deficit is.

To close the deficit by law (rather than by growth) would require
extreme austerity. And furthermore, that austerity would be
increasingly required as the economy gets worse. So things start
going downhill, the government tries to cut spending to
counteract the declining tax revenues, the economy gets weaker,
and soon you're on a spiral to deflationary, depressionary hell.

Cutting spending to reduce deficits doesn't work in practice.
Japan has seen this play out, as its government has flirted with
various austerity attempts during its log slog. Each time there's
been an attempt to reduce deficits... deficits have gone up.

The top Nomura economist Richard Koo has made this point (and this
chart) a centerpiece of his economic work.

What's interesting is the fact that the most basic reason to
oppose this idea -- that it would demolish the economy -- isn't
even well understood by the BBA's proponents, who only see minor
technical reasons (there'd be loopholes!) to oppose.

It'd be fine if George Will and everyone else wanted to say that
the above analysis is wrong, and that the economy would be just
fine if it had to balance the budget every year. That'd be a fine
to debate to have. But at least be aware that this is the main
issue.

This problem isn't confined to just Will.

The same ignorance was seen
when Joe Scarborough wrote about how Paul Krugman was all alone in thinking that the
deficit was not an urgent issue, which was just untrue. Lots of
people agree with Paul Krugman on the question.

Clearly in DC, the deficit debate is so one-sided, that many
people aren't even aware there are counter-arguments or people
who could be opposed, for economic reasons, the wisdom of
shrinking the deficit.